I watched the movie "Too Big To Fail" directed by Curtis Hanson who won an Oscar for the screenplay L.A. Confidential, which I enjoyed. It's sort of a follow up or different point of view from non-fiction documentary "Inside Job" to fiction, but based on real events. William Hurt plays Hank Paulson, the Secretary of the Treasury, former Goldman Sachs honcho, sort of the hero of the HBO film. 9 major surviving banks were strongly suggested to accept money to lend to customers: from the TARP plan, Troubled Asset Relief Program initiated by President George W. Bush in 2008, during the remaining months as a lame-duck president. Some of the CEOs initially refused because they said they didn't need the money. Some thought any bailout or money program would almost nationalize the banks, and/or the government would tell them what to do and how to do it. A few bankers complained that would interfere with salaries and bonuses. They would lose talent. They also feared regulation which would stymie their desires. Too Big To Fail - HBO Movie http://www.imdb.com/title/tt1742683/ The movie ends, as the book does, with the banks' (begrudging) acceptance of the government's capital injections and Paulson's sincere hope Wall Street will lend out some of the $125 billion it's been given. Yet it didn't work out that way. Banks lent less than they did before, and the government couldn't do anything about it. The film ends by acknowledging that the remaining Wall Street institutions are once again too big to fail, which may be good news for HBO. As Sorkin said last December, "I don't want to write another sequel, but I think there will be one." Movie Review: Too Big To Fail - Bloomberg Businessweek Magazine http://www.businessweek.com/magazine/content/11_22/b4230094075857.htm Early on in Too Big to Fail, Dick Fuld tells his chief financial officer, Erin Callan, "Screw Warren Buffettwe will stand strong and eat Goldman Sachs's lunch!" It's the first of several lines that reaffirm the old adage that tragedy plus time equals comedy gold. The HBO movie, adapted from Andrew Ross Sorkin's tome of the same name, comes nearly three exhaustively forensic years after Lehman Brothers went bust. And as every HBO subscriber will know, Fuld ended up eating a lot of something else. Yet his mildly hysterical delusions, enhanced by age, are an amusing reminder of the heady months in 2008at least for those who didn't own Lehman stock. In my opinion the bankers still run the government, or close to it. Very few presidents have a clue or serious understanding of the economy and finance at that level. Neither do the majority of bankers about "derivatives". Especially the formula concocted for mortgages. Once the bankers became investment bankers they cared little about the little guys though some said they did. They were making big money from the mortgage packages which they sold around the world. They asked for more mortgages from the brokers. Not all brokers were crooks, but those who were shady convinced people who did't need new mortgages or more houses to become more enthused with the Anmerican Dreams. Then there were those who couldn't afford a house to do deals. No problem. Until they had to pay. Hence subprime deals started, which meant even losers could get a mortgage. If they couldn't pay the houses would be forelcosed. The property was worth it; they could resell. However, the bankers and brokers never expected real estate values to drop, and the assets to become toxic. Oh-oh! And the world has not recovered.
The banks aren't lending because the Fed is paying interest on their reserves ($1T more than the $200B required by regulation). As best I can tell, that is to prevent the inflation that would result from the $10T to $30T of money loaned into existance if the banks lent, based on reserves.
There is sort of a mutually assured destruction thing going on. The special interests dangle money in front of all the politicians making the best offer, politicians threaten regulation and tax hikes, unless they get the money. The special interest aren't only the banks, unions have a pretty good hold as well.
